BUS103: Introduction to Financial Accounting

Read and take notes on sections 11.1-11.10 on pages 120-155.

This details the events that need to be dealt with when disposing assets. There are balance sheet and income statement entries that must be recorded when getting rid of equipment by scrapping it or selling it. It also discusses intangible assets, how to record them, and how to account for their diminishing value.

• Section 11.3 discusses how, with the exception of land, all assets eventually become of little to no use. A company will have to make the decision to trade the asset for a newer version, retire the asset altogether, or sell the asset. How is this decision made?
• Section 11.4 discusses the sale of a plant asset. Many business entities will eventually have to dispose of a plant asset. When this happens, the company will either have a loss or show a gain depending on the difference between the asset's sale price and its book value. This section shows journal entries from a variety of situations, including a gain on the sale of an asset, a loss on the sale of an asset, how to realize loss, and what to do when a fire or flood that destroys an asset. 
• Section 11.5 discusses the depletion of a natural resource and how to journalize it.
• Section 11.6 identifies the sources of an intangible asset. Pay attention to trademarks, amortization, patents, copyrights, trademarks, goodwill, and franchises.
• Section 11.7 explains the total assets turnover ratio, which illustrates the relationship between monetary volume and the average of the total asset.
• Section 11.9 offers a self-test. The solutions to self-test are on pages 173­-174.